5 Stocks in Breakout Territory With Big Volume - views

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

From a technical perspective, MELI ripped higher here right above its 50-day moving average of $117.07 with above-average volume. This move pushed shares of MELI into breakout territory, since the stock took out some near-term overhead resistance at $125.30. Shares of MELI are now quickly moving within range of triggering another big breakout trade. That trade will hit if MELI manages to take out some more near-term overhead resistance at $130.74 with high volume.

Traders should now look for long-biased trades in MELI as long as it's trending above $125 or $124 and then once it sustains a move or close above $130.74 with volume that's near or above 479,008 shares. If that breakout triggers soon, then MELI will set up to re-test or possibly take out its 52-week high at $136.52.

Vipshop

Vipshop (VIPS) rovides branded products to consumers in China through flash sales on its vipshop.com Web site. This stock closed up 9.3% to $47.89 in Monday's trading session.

From a technical perspective, VIPS soared sharply higher here right off some near-term support at $42.50 with heavy upside volume. This move pushed shares of VIPS into breakout territory, since the stock took out some near-term overhead resistance levels at $45 to $45.27 with high volume. Shares of VIPS are now quickly moving within range of triggering another big breakout trade. That trade will hit if VIPS manages to take out Monday's intraday high of $48.40 and then once it clears its all-time high at $50.43 with high volume.

Traders should now look for long-biased trades in VIPS as long as it's trending above $45 and then once it sustains a move or close above those breakout levels with volume that hits near or above 645,972 shares. If that breakout triggers soon, then VIPS will set up to enter new all-time high territory above $50.43, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $57.

Liquidity Service

Liquidity Service (LQDT) is an online auction marketplace for surplus and salvage assets. This stock closed up 14.9% at $34.44 in Monday's trading session.

From a technical perspective, LQDT skyrocketed higher here right off its 50-day moving average of $30.94 with strong upside volume. This move briefly saw shares of LQDT trend back above its 200-day moving average at $34.60, before it closed just below that level at $34.44. Shares of LQDT are now quickly moving within range of triggering a big breakout trade. That trade will hit if LQDT manages to take out Monday's intraday high of $35.21 and then once it clears some more near-term overhead resistance at $35.71 with high volume.

Traders should now look for long-biased trades in LQDT as long as it's trending above $32.67 or above $31.60 and then once it sustains a move or close above those breakout levels with volume that hits near or above 402,622 shares. If we get that breakout soon, then LQDT will set up to re-test or possibly take out its next major overhead resistance levels at $38 to $40.90.

Delta Air Lines

Delta Air Lines (DAL) operates as an airline, providing scheduled air transportation for passengers and cargo throughout the U.S. and around the world. This stock closed up 9.4% at $21.76 in Monday's trading session.

From a technical perspective, DAL gapped up sharply higher here right above its 50-day moving average at $20.06 with strong upside volume. This move pushed shares of DAL into breakout territory, since the stock took out some near-term overhead resistance at $20.55. Shares of DAL are now quickly moving within range of triggering another big breakout trade. That trade will hit if DAL manages to take out some more near-term overhead resistance levels at $21.99 to its 52-week high at $22.05 with high volume.

Traders should now look for long-biased trades in DAL as long as it's trending above Monday's low of $20.76 and then once it sustains a move or close above those breakout levels with volume that's near or above 10.83 million shares. If that breakout hits soon, then DAL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $27.

Isis Pharmaceuticals

Isis Pharmaceuticals (ISIS) is engaged in antisense drug discovery and development, exploiting a novel drug discovery platform it created to generate a broad pipeline of first-in-class drugs. This stock closed up 13.9% to $31.81 in Monday's trading session.

From a technical perspective, ISIS gapped up sharply higher here and broke out above some near-term overhead resistance levels at $29.55 to $30 with strong upside volume. This stock has been uptrending strong for the last few weeks, with shares moving higher from its low of $23.63 to its intraday high of $31.88. During that move, shares of ISIS have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of ISIS are now quickly moving within range of triggering another big breakout trade. That trade will hit if ISIS manages to clear its next major overhead resistance levels at $32.09 to its 52-week high at $34.31 with high volume.

Traders should now look for long-biased trades in ISIS as long as it's trending above Monday's low of $29.85 or above its 50-day at $28.37 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.50 million shares. If that breakout triggers soon, then ISIS will set up to enter new 52-week-high territory above $34.31, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $43.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.